Research on insider transaction activity shows that insiders at small firms tend to earn greater profits from their stock purchases than insiders at large firms do. This is due to the fact that smaller companies are less researched than larger companies, meaning that they are often less efficiently priced.
In this report, we are going to highlight some interesting insider buying at a small US company, RF Industries Ltd (RFIL:US). RF Industries specializes in the design and manufacture of interconnect products. Its products, which include RF connectors, coaxial cables, data cables, fiber optic cables, custom cabling, energy-efficient cooling systems, and integrated small cell enclosures are used in a range of markets including the wireless/wireline telecom, data communications, and industrial markets. The company is listed on the NASDAQ Global Market and currently has a market capitalization of $83 million.
RF Industries Ltd: Insider Buying
Our data shows that between December 23 and December 31, Chairman Mark Holdsworth bought 57,051 RFIL shares at an average price of $7.81 per share. This trading activity cost the insider $445,300 and increased his holding to 441,388 shares.
Over this period, board member Sherry Cefali also picked up 9,472 shares at an average price of $7.51 per share, spending about $71,000 on stock.
Both of these insiders are likely to have a good understanding of the intrinsic value here.
Mr. Holdsworth is an experienced investor. Currently, he is Managing Partner at The Holdsworth Group, a trusted and sophisticated capital partner, advisor, and curator of alternative investments for family offices and corporations worldwide. Previously, he was a Co-Founder, Managing Partner and an Operating Partner of Tennenbaum Capital Partners, a Los Angeles-based private multi-strategy investment firm that was acquired by BlackRock in August 2018.
Meanwhile, Ms. Cefali is currently a Managing Director in the transactions opinions practice at Duff & Phelps. She has over 30 years of experience rendering fairness and solvency opinions and determining valuations of companies and securities.
RF Industries’ recent Q4 results showed that the company has a lot of momentum right now.
For the period, net sales were up 38% sequentially and 97% year over year to $21.1 million. Meanwhile, net income came in at $813,000, up from $159,000 a year earlier. At the end of October, the group had a backlog of $33.3 million on fourth quarter bookings of $22.9 million.
Looking ahead, management was confident that the company will continue to generate growth.
“Our investments in our go-to-market strategies are building positive momentum around new business, as evidenced by several multi-million dollar orders for our hybrid fiber solution received this past year that continue to contribute to our strong backlog. As we look ahead for fiscal 2022, we expect our year-over-year revenue growth to be north of 10%, which should put our total fiscal 2022 sales at greater than $63 million,” said President and CEO Robert Dawson.
In light of these strong results, we see the insider buying here as a bullish indicator.